Operational Aspects of Fiscal Policy in Oil-Producing Countries

35 Pages Posted: 3 Feb 2006

See all articles by Steven A. Barnett

Steven A. Barnett

International Monetary Fund (IMF) - Fiscal Affairs Department

Rolando Ossowski

International Monetary Fund (IMF)

Date Written: October 2002

Abstract

Oil-producing countries face challenges arising from the fact that oil revenue is exhaustible, volatile, and uncertain, and largely originates from abroad. Reflecting these challenges, the paper proposes some important general principles for the formulation and assessment of fiscal policy in these countries. The main findings can be summarized in some key guidelines: the non-oil balance should feature prominently in the formulation of fiscal policy; it should generally be adjusted gradually; the government should strive to accumulate substantial financial assets over the period of oil production; and, where necessary, strategies should aim at breaking procyclical fiscal responses to volatile oil prices.

Keywords: Oil petroleum fiscal policy oil-producing countries nonrenewable resources fiscal sustainability

JEL Classification: E62 G13 H61 H62 H63 Q33 Q38

Suggested Citation

Barnett, Steven Alan and Ossowski, Rolando, Operational Aspects of Fiscal Policy in Oil-Producing Countries (October 2002). IMF Working Paper No. 02/177, Available at SSRN: https://ssrn.com/abstract=880239

Steven Alan Barnett (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Rolando Ossowski

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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